Railroad Commission Jurisdiction Over Groundwater Contamination

An article on the front page of the Austin American-Statesman last Sunday caught my eye: “Regulators Passed on Pipeline Penalty,” by Asher Price. It’s not often that the Railroad Commission makes the front page. The article tells the story of a pipeline leak in Fayette County in 2014 and the Commission staff’s efforts to get its operator, DCP Midstream, to test for groundwater contamination.

According to the article, DCP didn’t initially report the pipeline leak to the RRC. Leaks are not required to be reported unless they exceed 5 barrels, and DCP claimed it initially thought the spill was not reportable. DCP later estimated the spill at 42 barrels.

The line was a natural gas gathering line, carrying gas and condensate. Condensate is a light, clear liquid, much like gasoline. It contains hazardous chemicals, in particular benzene. It easily percolates into soil and if it reaches groundwater the resulting contamination will make the water unusable.

The RRC has jurisdiction over leaks from production facilities, including gathering lines, that cause groundwater contamination, under its Operator Cleanup Program. The RRC’s rule provides that “No person conducting activities subject to regulation by the commission may cause or allow pollution of surface or subsurface water in the state.”

DCP hired the REW Group, an environmental consultant, to investigate the leak. The pipe was excavated and contaminated soil around the leak was removed. REW drilled a test well to see if condensate had reached groundwater, and testing of the water detected benzene in the water. Based on that test, REW recommended “further investigation by expanding the previous limited scope of the groundwater sampling.” The RRC then requested that DCP drill additional wells to delineate the extent of the contamination. But DCP refused. The RRC then initiated an enforcement proceeding to force DCP to drill additional wells.

Enforcement proceedings at the RRC are handled by administrative law judges who are employees of the RRC. (Such administrative hearings for all other state agencies are conducted by the State Office of Administrative Hearings, which has administrative law judges separate from the agencies for which they hold hearings). After a hearing, the judges issue a Proposal for Decision which is presented to the three commissioners for action.

The DCP enforcement action was heard on November 16 and 17, 2017, before the two ALJ’s assigned to the matter, Clayton Hoover and Robert Musick. At the hearing, DCP argued that the groundwater contamination could have come from two old wells close to the site. It also contended that a clay layer between the surface and the groundwater aquifer would prevent migration of condensate into the groundwater. But DCP’s geologist also admitted that there was no way to know based on one test well whether the clay layer was continuous across the spill site and would be an effective barrier against vertical migration of the condensate.

The ALJs issued their proposal for decision recommending that DCP be fined $10,000 and be required to further investigate the groundwater contamination at the site. The ALJs found that “the preponderance of the evidence presented shows there is groundwater pollution in the immediate area of the spill,” and that “DCP has not brought the violation into compliance by the installation of additional monitoring wells and there is a lack of good faith.”Regarding DCP’s theory that other sources were responsible for the contamination, the PFD says:

No quantitative data was submitted by DCP to support the theory that historical oil and gas operations were the source of the impacts to groundwater beneath the condensate spill site. DCP failed to demonstrate with reasonable certainty that nearby historical oil and gas operations were the cause of the impacts to groundwater proximal to the condensate spill site. DCP did not collect samples as required by the Field Guide to characterize impacts to groundwater and did not demonstrate by sampling that the release beneath the condensate spill site is associated with historical oil and gas operations. Hence, there is insufficient data to show an alternative source of benzene or to overcome Enforcement’s case based on a preponderance of the evidence standard.

The ALJ’s proposal for decision was then presented to the three commissioners last week. Commissioners Wayne Christian and Christi Craddick voted against the proposal, and Commissioner Ryan Sitton voted for the proposal. Commissioner Craddick said: “I don’t think staff ever made the case that DCP had caused this. We didn’t prove our case up. There’s a lot of possibilities, and no preponderance of evidence.” Commissioner Sitton said:

If our approach is, ‘You didn’t notify us, no big deal. You didn’t do the tests, no big deal,’ then how are we going to get the data to make these decisions? If feel like your point here is to get them to go out and do additional tests — that ought to be exactly what we ought to do. That’s how we’re going to find out what happened in this case.”

The Statesman article notes that since 2011 DCP has contributed $22,500 to the Craddick campaign fund and $16,000 to the Christian campaign fund.

There’s a lot that might be said about this case.

First, in my view Commissioner Craddick did not understand what RRC staff needed to show in order to require DCP to conduct additional investigations. She would require the RRC to prove that DCP caused the groundwater contamination. That would require drilling additional test wells. But all the Commission staff had to show was that there was evidence of contamination of groundwater in the vicinity of the spill that required additional investigation. Craddick’s burden of proof would make it impossible for the RRC to ever require the polluter to conduct additional investigations.

One might also consider the effect this ruling has on Commission staff. They are charged with enforcing the Commission’s rules. DCP ignored their requests, so they sought an order from the Commissioners to require DCP to do what they asked. Instead the Commissioners criticized them for not making their case.

Or consider the case from the perspective of the administrative law judges. Mr. Hoover is a lawyer, Mr. Musick is a petroleum engineer. They listened to two days of testimony and evidence and drafted a proposed decision with detailed findings of fact. Commissioner Sitton, a petroleum engineer and the only member of the Commission with any oil industry experience, agrees with their conclusions. But the case against DCP is dismissed, and no further investigation of groundwater contamination will be conducted.

My experience representing landowners who suffer leaks on their land is that operators are very reluctant to investigate groundwater contamination. If contamination is found, remediation of the groundwater can be very expensive and take years. Better not to know. If the Commission is unwilling to force companies to fully investigate groundwater contamination, the consequence is that companies are not held accountable for their actions, and they can ignore requests from Commission staff.

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